OK, I stole the title. Conjectures and Refutations is the title of a collection of essays by Karl Popper, the great philosopher of the open society. I’m just borrowing Popper’s approach to learning. My conjectures, your refutations. All I hope to do here is talk about things that interest me and see if anyone has anything interesting to say in response.

Tuesday, October 21, 2014

Minimum Effort

With Seattle set to raise its minimum wage to fifteen bucks an hour and the Democrats making a rise in the minimum wage a campaign issue, the debate seems to have been won by those who think it’s a good idea for the government to mandate a minimum level of compensation for workers. I’m not sure it is; I’ve written about this before, arguing that jobs are lost at the low end of the scale, i.e. among the neediest and most vulnerable workers, when a minimum is imposed. A lot of people agree with me; a lot of others don’t. Everybody’s got a study or two supporting their point of view. I’m not sure the question can be settled by studies; with a large, dynamic system like an economy it’s easy to cherry-pick data and hard to control for variables. People find data to support what they want to believe. That doesn’t mean there’s no right answer; it probably means it’s yet another messy real-world issue involving trade-offs.

The Congressional Budget Office came out with a study earlier this year that both sides are citing. To summarize, the study concluded that there is a trade-off between job losses and raised income levels for people who keep their jobs, with more people raised above the poverty line than lose their jobs. In both cases the percentages we’re talking about are relatively small; a high minimum wage will neither solve the poverty problem nor throw everybody out of work.

I’m glad to see acknowledgement of the trade-off; many advocates of a high minimum wage refuse to acknowledge any negative effects at all. If we’re talking about weighing costs against benefits, we’ve made progress. Too often, anybody expressing doubts about a high minimum wage is demonized as not caring about the poor.

I’m well aware that a lot of people with jobs have a tough time making ends meet. This could be because stingy employers aren’t paying them as much as they deserve, or it could be because they’re in a low-skills job at a low-margin business and there just ain’t enough money in that line of work. When the Chicago Tribune asked a cafe owner what his response to a higher minimum wage would be, he said, “If they raise the minimum wage to ten dollars, I’ll have to close.” Take that, you robber baron.

I think the best thing to do for people who think they are not paid enough is to ask around and find out whether they really have a case. If so, if it looks like their employers are raking in the money while not paying the workers enough to live on, then the best thing to do is good old-fashioned labor action. Organize. Strike if you have to. Call me a left-wing firebrand, but that’s a better response than a government-imposed minimum, because local conditions vary, and there’s no reason to assume that there’s one correct wage level for the whole country.

So I’m not opposed to workers getting the maximum they reasonably can from employers. I’m not even opposed to unions taking up their cause. I am dubious about legislative fixes that require us to decide if raising 900,000 people above the poverty line is worth throwing 500,000 people out of work. (See the CBO study.) There are better ways to keep employers honest than a law that undermines its own credibility by including an extensive list of exemptions. (Here is the one for the federal minimum wage.)

In any event, I suspect we’re about to get another data-gathering opportunity for rival studies as the pendulum swings toward rising minimum wages. I don’t have the numbers to say it’s wrong, and I’m willing to look at the evidence. All I ask is that reporters work just as hard to find the people who lose their jobs to the minimum wage as they have worked to find people who have a hard time living on it.

1 comment:

Very well stated Mr. Reaves. When I've pointed out the potential for huge numbers of newly unemployed as a result of raising the minimum wage I'm often branded as some sort of right wing loon. It shuts down any further honest intelligent debate & widens the ideological gulf. Like you I'd be for trying to find some happy medium that isn't a "one size fits all" solution. Unfortunately the political walls are too high & very well fortified to allow for that possibility. Sadly those same walls prevent a lot of problem-solving potential on other issues as well.